In the busy fray of pre-Infocomm preparations last week, Clearwire made a stunning announcement on signal distribution with the two major US satellite providers, Echostar and DirecTV. In retrospect, it’s a match made in heaven. The wireless broadband start-up and brainchild of Craig McCaw is looking to challenge the duopoly of cable and phone companies with new Wi-Max (wireless) internet service to the home. And both satellite providers are loosing subscribers who want TV programming, telephone and broadband service (the "triple-play")-that up until now only cable and the telco’s could deliver.

Steve Sechrist
Senior Analyst and Editor
Projection Monthly

The deal allows an in-kind service exchange between the two technologies, giving Wi-Max broadband access to satellite subscribers, and allowing Clearwire broadband customers to opt for either of the two satellite TV services.

The deal will almost assuredly accelerate the ramp of Wi-Max build out for Clearwire seeking to catch-up in major coverage areas nationwide. To date, Clearwire has networks in 39 markets and serves a total population base of about 10 million. From this population, the company claims about 250K subscribers, all in smaller cities and rural areas. DirecTV and EchoStar boast 16.2 million and 13.5 million subscribers respectively, and cover the entire US with a ring of satellites circling overhead.

But the wireless broadband deal also offers some unique benefits the cable boys are unable to match. Unlike cable and DSL broadband, which are terrestrial or "trench technologies", the Wi-Max wireless technology of Clearwire offers a "nomadic" benefit. Users can now use their subscriptions
off-premises and access the broadband signal throughout the coverage area via laptops and other mobile devices. It also empowers a competitive albeit limited mobile VOIP phone service-that of course is also coverage area dependent.

Our take: any solution that seeks to break up the duopolistic pricing of internet broadband service is a market positive and a potential boon to consumers. Wi-Max has this potential and others (like Sprint) are also looking to team with Clearwire. Hats off to McCaw and his second wireless marketing coup-the deal is a match made in heaven for all concerned. All that is but the telco’s and cable provides now faced with the prospect of a round of long overdue competitive price reductions.